Precision Drilling Corporation (“Precision” or the “Company”) (TSX:PD; NYSE:PDS) is pleased to announce transactions to divest our five Mexico based drilling rigs and our water treatment business branded Terra Water Systems.
Image: Precision Drilling to sell five Mexico-based drilling rigs. Photo: courtesy of NjoyHarmony from Pixabay.
We have entered into an agreement to sell five idle drilling rigs and ancillary equipment currently located in Mexico for US$48 million. To date, the Company has received US$30 million for the sale of three drilling rigs and ancillary equipment with the balance of US$10 million and US$8 million due upon delivery of the fourth and fifth rigs in March and April 2019, respectively. At the conclusion of this transaction, Precision will have no assets in Mexico. Regarding Terra Water Systems, Precision recently closed the transaction to divest the assets and business for an undisclosed cash consideration. Precision continues to explore divesting other non-core assets and businesses to focus on our High Performance, High Value land drilling business and efficiency-driven technology initiatives.
Separately, the Company has initiated the redemption of US$30 million of its 6.50% senior notes due 2021 on a pro rata basis with available cash on hand. The redemption payment will be made on April 16, 2019. Debt reduction and de-leveraging remains Precision’s top priority and we are pleased to accelerate our program with this redemption.
We are also pleased to announce that the Company has signed three-year contract renewals for two rigs in Saudi Arabia, effective March 1, 2019. These rigs had been working on shorter-term extensions since August 2018, when their original contracts expired. Precision’s third active rig in Saudi Arabia is currently contracted through 2022. In Kuwait, Precision signed one-year extensions on two rigs that were set to expire mid-year and remain on track to deliver our sixth new build rig in July. Once delivered, we will have nine rigs operating in the Middle East on long-term contracts, providing firm line of sight on operating activity and stable cash flows in this region.
Source: Company Press Release